Energy Market Updates

Overnight and early trading on Crude was up - bolstered by the performance of the Chinese Markets (they went up instead of crashing hard enough to trigger the circuit breaker this time). US Stocks, bonds and equities all climbed along, and it looked like today was poised for a rally, or at least the proverbial "dead cat bounce"

However, once the temporary amnesia wore off, Iran coming back online came back into play and the markets took a beating across the board.

WTI Crude closed out at $28.46 - slightly below the $28.50 sub-$30 benchmark some analysts had projected (or more likely hoped) would be the new "bottom". That remains to be seen.

ULSD followed suit with WTI, dropping .0256 to settle at $0.9087, while gas was up 50 points to stay in the $1.02 range ($1.0262 to be precise).

Stocks unfortunately also followed suit with WTI - as of writing the Nasdaq, Dow Jones, and S&P are all down - keeping 2016 in the red as it has been thus far.

The EIA inventories later this week could have a major impact, particularly if there are builds. Most predict draws, but a build on gas could be significant as we could in theory see RBOB follow ULSD below the $1 benchmark.

Yesterday we saw a somewhat unexpected rebound on oil prices and the stock market - but it all came crashing down today. Crude has officially closed out under $30 per barrel - settling at $29.42, the lowest it's been in 12 years. RBOB closed off almost 5 to settle at $1.0212 - dangerously close to the $1 threshold, and ULSD continued its slide down another .0465 to $0.9343.

The US stock market followed suit with commodities - by mid day the Dow & S&P were both down 500 points, with the Nasdaq off 3% as well.

What's going on?

China's markets plunged another 3+% percent overnight, stoking fears of a continuing global oil glut. Also playing on those fears was today's data from the Federal Reserve indicating US Industrial Production (manufacturing, mining, and utilities) dropped again in December, which is the 3rd month in a row. Both of these indicators are extremely worrisome in terms of demand.

More importantly however, it's about Iran.

Reports are that "implementation day" - when Iran shows compliance with agreement terms and has their sanctions officially lifted, could be as soon as tommorow. Once sanctions are lifted, Iran is expected to start exporting their Crude storage as soon as possible, which pushed traders to sell, sell, sell today - to the tune of a 5% drop in pricing. It also keeps the outlook on Crude bearish, as the global market can ill afford millions more barrels entering supply, especially in the face of weakening demand from the US & China - the worlds two largest energy consumers.